Insurance Fraud Weekly ePort–Week Ending Sept. 28

Oct 3, 2007

Insurance Fraud Weekly ePort
September 28, 2007



* Florida lawmakers may try to keep the state’s expiring no-fault auto system alive. Their goal is to buy time to develop more PIP anti-fraud measures, then unveil a tougher new PIP system in mid-January. Florida’s expensive and fraud-ridden no-fault system is scheduled to expire Sunday. But the legislature is slated to convene a special session next week. If PIP makes the agenda, the system could be extended. But several insurers are pushing to scrap PIP, and thus oppose extending it. So there’s still no certainty PIP will be resurrected despite the flurry of last-minute activity.

Note: Texts of anti-fraud bills are available on the coalition’s website here.


* The glowing green eye is watching again. The Virginia State Police will re-launch its well-known anti-fraud TV spots in select markets in October and November. The so-called “Sharp Eye” turns green when it first blinks. The TV spots urge residents to report suspected fraud to a tollfree hotline, with a potential $25,000 reward. The eye also will stare out from car trailers at racing events around the commonwealth, urging residents to report suspected vehicle thefts. Contact Pam Jewel, public relations manager, at 804-674-2777 or


* A police officer sworn to protect people from criminals became one himself. Former Baltimore officer Michael Nelson and his wife Tierra unleashed a small wave of insurance schemes. They made a false theft claim for a car that wasn’t stolen, a burglary that never happened, and for a phantom traffic accident. The Nelsons were caught when Tierra told an FBI informant that Michael also was selling fake police reports that cronies could use in insurance schemes. Michael received a year in federal prison this week, and Tierra received five months.

* Insurance agent George Robert Lane convinced clients to hand over nearly $98,000 in premiums by making the checks out to him instead of Farmers Insurance. The St. Louis-area man then spent their money on personal expenses, but changed the client addresses with Farmers so the policyholders wouldn’t know that the insurer had canceled their coverage for nonpayment. The owner of the Lane Insurance Agency received 15 months in federal prison, and must repay the stolen money.

* George Singh provided auto liability coverage for about 100 vans for Prime Time Shuttle, which ferries people to Los Angeles-area airports. But the owner of Monika Insurance Services gave the drivers fake insurance cards, and kept more than $1.5 million of the van service’s premiums for his personal use. No one was covered, and 11 victims suffered uninsured medical expenses and property damages. Singh received a year in federal prison and must repay the stolen premiums.

* A temporary employment agency in Quincy, Mass. dodged its full share of workers comp premiums by funneling more than $30 million in cash salaries to workers under the table. The temp agency employed hundreds of workers for factories and warehouses around Boston and other areas of the state. But the owners played cat-and-mouse with authorities, hiding employees in shell companies that they quickly set up and shut down to avoid detection. Among the firms were First State Labor, Wonder Fast Labor Services and Mass Labor Services. The firms also had straw officers who had no duties but were paid for the use of their names. Tina Le, Steven Nguyen and Mercedes Acar pleaded guilty to federal charges this week. The Massachusetts fraud bureau was a key member of the investigative team that unraveled the scheme.


* Luigi Campobello said someone stole his 2005 Jeep Wrangler in Hyannis, Mass. Commerce Insurance paid out about $19,000, and police later recovered the vehicle in Springfield. The Massachusetts fraud bureau investigated, and says the Jeep was never stolen. Campobello stored it with a relative in order to make a bogus insurance claim, officials allege.

* Eleven people doled out fake certificates used by untrained home healthcare aides who billed New York’s Medicaid program more than $1 million, prosecutors charged Tuesday. The busts were part of a wide probe into the state’s multi-billion-dollar home healthcare industry. Ronald Kehinde, who works at a school for training home-health aides in the Bronx, allegedly ran a certificate-distribution ring. He provided fake training certificates from his school to untrained aides, prosecutors say.


* A former attorney has been disbarred for his role in a $24.7-million health insurance scheme that bilked more than 2,000 people. Ben J. Zander was involved with Meridian Benefit, a New Jersey firm that negotiated group discount health premiums for client firms, and processed and paid their medical claims. But instead of holding client money in separate trust funds to pay claims, Meridian owner Donald Ruth funneled the money into a single bank account he controlled. Ruth used the money for clothes, travel, a boat, a house in Florida and other personal expenses. Meridian went bankrupt in 2003, leaving about $15 million in unpaid medical and related claims. Zander, who was Meridian’s inhouse counsel, helped conceal the scheme. The state Supreme Court agreed this week that he should be disbarred. Part of that decision was based on the 21 months in prison Zander received last year.


* The Bush Administration will shift hundreds of agents from white-collar crime to counter-terrorism for 2008, greatly limiting the agency’s ability to hunt down white-collar criminals, the Seattle Post-Intelligencer says in an analysis of the Administration’s 2008 budget yesterday. Some 400 street agents fighting crime will head to counter-terrorism and another 246 vacant criminal agent positions won’t be filled for next year. This means a 26-percent overall drop in criminal agents from 2007, the Post-Intelligencer says. At least 2,400 agents have been transferred to counter-terrorism since 9/11, resulting in a dramatic drop in FBI investigations and case referrals. Criminal referrals for prosecution have fallen 34 percent and white-collar crime convictions have dropped 30 percent, the newspaper says. The FBI disputes those findings, saying the cuts in agents will be milder.

* The head spokesperson for Detroit Mayor Kwame Kilpatrick admitted this week that he illegally saved auto premiums for four years by registering his car in a suburb even though he lived in the city. Matt Allen says he lived both in the city and at his parents’ home in Oakland County. Allen says he now has registered his car in Detroit. No word if criminal charges are involved. The mayor’s sister Ayanna Kilpatrick used an Ypsilanti address to lower her auto premiums despite living in Detroit, according to news reports. Her insurer refunded her premiums and refused to pay for her Lincoln Navigator, which was stolen outside a downtown Detroit nightclub in 2001.

* Connecticut’s insurance department has recovered more than $1 million for consumers during the second quarter, and has started up a new consumer council that includes the Coalition Against Insurance Fraud. The consumer council met this week to begin bringing a stronger consumer voice to the department. Howard Goldblatt represents the coalition.

* Male investigators at insurers earn more than women at almost every level, and overall six of 10 SIU employees say they’re unhappy with their pay, according to an SIU salary survey released this week by Insurance Compliance Insight newsletter. Male managers earn 13.9 percent more than women, investigators 6.6 percent more, and analysts 40.7 percent more. In general, SIU vice presidents averaged $102,000 anually, directors $100,833 and managers $80,188. Investigators also gripe about low 2-3 percent pay raises despite increasing workloads. Said one investigator: “I’d like just once to be able to make more than the crooks I catch.” For the full survey report, forward this e-mail to

* Alan Haskins is leaving his position as NAIC’s anti-fraud coordinator to become the new director of government affairs for the National Insurance Crime Bureau (NICB). Alan has been with the NAIC for five years, and his last day will be October 12.

* Auto premiums have hit the brakes in New York, thanks in part to success in hunting down staged-accident rings and other auto-insurance scammers. The average driver paid $1,263 for auto coverage in 2005, down from $1,324 the previous year, according to the latest figures from the National Association of Insurance Commissioners. New York’s premiums are still a third higher than the national average and second-highest in the nation, but also dropped the most. State officials credit a crackdown on auto-insurance fraud, more industry competition and the insurance department’s push for insurers to lower rates.


“I didn’t try to deceive anyone out of their money. I was just trying to maintain my business.”

-Ex-Indiana mortician Kent Kellogg, commenting on his guilty plea of cashing-in policies for 27 people who were still alive.


* New Jersey driver indicted for faking theft of his car
* Ex-mortician in Indiana pleads guilty to policy scam
* Woman charged with using child’s ID to get painkillers
* Judge orders doctor, lawyer in Las Vegas to stand trial

Details at


* October 25, 2007 — 3rd Annual California Insurance Fraud Symposium Torrance, CA (The National Underwriter Company)

* December 11, 2007 — Annual Membership & Board Meeting Washington, DC (Hyatt Crystal City)

For more info, visit online events.